The Pakistan Credit Rating Agency Limited
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Muhammad Azmat Shaheen

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PACRA Maintains Asset Manager Rating of Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited)

Rating Type Asset Manager
(03-Mar-23 )
(03-Mar-22 )
Action Maintain Maintain
AM Rating AM2+ AM2+
Outlook Stable Stable
Rating Watch - -

The rating reflects Alfalah Asset Management Limited's (Formerly: Alfalah GHP Investment Management Limited) (the "Company") prominent position in the domestic asset management industry, supported by a structured investment process, sound governance structure, proficient and qualified management, and diversified product slate. The Company has also established its presence in the competitive investment advisory domain, supplementing its revenues. Since Jun'22, the Company's AUMs grew by 10.3% to stand at PKR 67bln at end-Jan'23 (Jun’22: PKR 61bln). However, the Company's market share contracted to ~4.6% (Jun'22: 4.9%) due to industry's higher growth rate (~17.2%). The AMC has also strengthened its digital platform for better retail penetration, enhanced customer services and to create synergies with the parent bank. The Company’s product slate is tilted towards money market funds with more than 80% of total assets concentrated in this category. However, the Company has also further diversified its fund's slate by introducing plans in Fixed Rate/Return categories. The funds performed positively in comparison to peers and most of the funds remained above their respective benchmarks.
The investment income of the Company improved to PKR 338mln during 9MCY22 (9MCY21: PKR 301mln). The profit after tax stood at PKR 123mln during the 9MCY22 (9MCY21: PKR 118mln). The equity of the Company stood at PKR 1.4bln at end Sep'22, which is well above the minimum capital requirement. The ratings find comfort from the Company's association with Bank Alfalah Limited and potential synergies due to established presence of sponsor banks branch network.
The rating is dependent on the Company’s ability to strengthen its market position along with its peers while sustaining superior fund performance. At the same time, stability in key human resource, structured improvement in risk management framework and success of initiatives to increase retail AUM will remain crucial for the rating.

About the Entity
Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited) was incorporated on October 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds and offer investment advisory services. The Company provides a wide range of mutual funds and pension funds both in conventional and Shariah compliant category. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. Recently, GHP Arbitrium has divested it's share in the AMC and the current ownership structure stands with MAB Investments Inc. (~59.8%) and BAFL (~40.2%). The Company’s board of directors comprise eight members including the Chairman. The board has two independent and five non-executive directors. The board members possess strong profile and skills suited to the financial services industry. The CEO - Mr. Nabeel Malik has diversified experience in the field of fund management and fixed income trading/facilitation. Assets under management of the Company stood at ~PKR 67bln at end Jan’23 and are spread across sixteen open-end mutual funds, two voluntary pension schemes and one ETF scheme.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.